Zimbabwean Finance Minister Samuel Mumbengegwi was to deliver a supplementary budget and interim fiscal policy statement in parliament on Thursday, but economists predicted Harare would ask the central bank to print more money to cover costs.
Economist John Robertson said most ministries exhausted their funds early this year as the government called for inflation would fall to 350-400% by the end of 2007. But as of July the country's 12-month inflation rate had surged to 7,634%.
Robertson said the government has borrowed money from pension funds to meet its ballooning costs. President Marah Hativagone of the National Chamber of Commerce said the finance minister must ensure that industries become viable again by resolving continuing acute shortages of fuel, electricity, water and foreign exchange.
Economist-consultant and former Chamber president Luxon Zembe said Harare must not present a populist election-year budget, but must first and foremost address the food crisis hitting city and country alike, which he called a "ticking time bomb."
However, Finance Ministry insiders said Mumbengegwi – brother of Foreign Minister Simbarashe Mumbengegwi – will raise the threshold under which citizens pay no taxes while backing the Reserve Bank’s recommendation that the official exchange rate of Z$250 to the U.S. dollar be raised, in effect officially devaluing the currency.
One U.S. dollar was fetching 240,000 Zimbabwe dollars in parallel market dealings.
Director Godfrey Kanyenze of the Labor and Economic Development Research Institute told reporter Blessing Zulu of VOA's Studio 7 for Zimbabwe that not much of substance can be expected from the finance minister in tomorrow's address.
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